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Culture Eats Strategy for Breakfast

 

Many organizations globalize. The importance is increasing in how leaders can operate effectively and how we can design our organization in line with culturally diverse situations. Cultural psychology and neuroscience are closely interrelated disciplines as “Culture is, after all, stored in people’s brains” (Ames and Fiske; 2010). Without neurobiological capacities, culture could not function. The Harvard Business Review has recently (Jan.-Feb. 2018 issue) addressed these business challenges in their cover story with its headline “The Cultural Factor”. But can we only look at these problems without finding any solutions for them or can we obtain advantages from cultural diversity?    

In my MBA Master’s thesis which I wrote years ago, I had already studied the human factors of cross-border M&A transformation processes. Many of those transformation processes suffer from weak emotional competences. From today’s neuroscience, we know that people are more adept at accurately recognizing the emotions of people from their own culture than from others. Studies from cultural neuroscience are showing greater activities in regions of the brain associated with emotional processing when people are asked to identify the emotions of their co-nationals compared with those of foreigners. Many M&A transformation processes failed because leaders projected their thoughts and feelings on other culturally dissimilar persons–a behavior which leads to ethnocentrism. Due to this fact, many corporations are forfeiting a lot of benefits that could be obtained because of poor cultural competence in their leadership.    

Every culture has its iconic symbols. This is applicable to national as well as corporate cultures. The presence of these symbols in the immediate environment can evoke from memory the dominant biological orientation in the culture as well as the cognitive and neurological behavior that accompany the activated orientation. Without any doubt, there are individual differences in adapting their cognitive and neurobiological behaviors. Nevertheless, if a transformation process is aiming to simply take over another business, this transformation strategy will fail. The people in the company which is taken over will lose their status. They will feel a sense of unfairness and above all this will very often create uncertainty. In Mergers & Acquisitions, we need to have more cultural intelligence–particularly when it comes to cross-border M&A processes.    

Cultural intelligence refers to the capability of individuals to function effectively in multicultural contexts. Since my early childhood, I have been involved in an international youth organization. When I was educating our leaders, I was teaching them how they could strengthen their cultural understanding. It is particularly all about understanding–not merely tolerating cultural differences–as tolerate comes from the Latin word “tolerare” which means to “suffer”. We are different because our cultural values are different. We do not have to be equal as this would limit our possibilities that are created from our diversity. Once people understand the differences, they can start building bridges and take advantage of cultural diversity. If this is important in an international youth volunteer organization, why do we then put so much less focus on cultural intelligence in our leadership training classes?     

For me, a fascinating finding of neural research is namely how people represent themselves and others. Research has shown that thinking about another close person elicited preferential activation in the ventral medial prefrontal cortex for Chinese participants, but not for the Western participants indicating that Eastern participants view others as part of themselves. So the findings imply that, while Eastern participants engage the same region in the brain, Western participants engage different parts of the brain when processing information about themselves and significant other persons. 

In terms of change management, this means that we have to use multi-cultural communication strategies. People from nations which place a high degree of importance on individualism (see Hofstede) require answers to effects on individual persons based on analytical facts; a collectivistic mind-set will focus much more on the effects on the society that are triggered by the transformation process. The informational and communication strategy in a multicultural transformation process requires a multi-channel strategy.    

A culture with a long-term perspective will survive only as long as it is in line with the existing culture. A culturally-diverse organization must therefore offer a diverse organizational design. In the case of a merger, this has to result in a new organization. An organization which is the answer to the questions which evolve from both cultures? This requires, on the one hand, time and, on the other hand, the integration of the affected people into the transformation process. Creating the new culture is not about one’s self or significant other persons, it is about one’s self and significant other persons. And this culture cannot be defined top-down by the management board. Instead, it has to come into being from bottom-up. If we do not want to create a cultural clash, the leaders in this transformation process need to be the facilitators of the process rather than the change agents. They must not define the outcome, but rather they have to ensure that the outcome is in line with all cultural aspects.    

In fact, cultural diversity poses the most complex questions in leadership to us. Our leadership challenges in multi-cultural corporations are related to the effectiveness of the leader’s ability to solve complex social problems. Today’s leaders in a globalizing economy have to deal with large cultural variations in the behaviors and expectations of various stakeholders. Cultural intelligence does not predict general leadership effectiveness, but rather has a positive impact on self-awareness and this is an important part of emotional competence. We need leaders with high emotional intelligence as those are the successful leaders of a global business because: Effective global leaders are expected to not only understand, but also bridge cultural differences. 


Recommended References:

  • Rockstuhl, T; Hong, Y; Ng, K; Ang, S; Chiu C: “The Culturally-Intelligent Brain: From Detecting to Bridging Cultural Differences” in the Handbook of NeuroLeadership; 2013;
  •  Ames, D; Fiske S.T.: “Cultural Neuroscience” in the Asian Journal of Social Psychology; 2013.